This Separation and General
Release Agreement (this “Agreement”) is entered into by
and between Roubik Gregorian (“Gregorian”) and Exar
Corporation, on behalf of itself and each of its subsidiaries
(collectively, the “Company”).

WHEREAS, Gregorian is
currently employed by the Company as its Chief Executive Officer
and President pursuant to the terms of an Employment Agreement,
dated August 2, 2005 (the “Employment
Agreement”);

WHEREAS,
Gregorian’s employment with the Company terminated, effective
February 22, 2007;

WHEREAS, the Company
and Gregorian agree that, subject to Gregorian entering into this
Agreement, Gregorian is entitled to receive the severance benefits
provided for under Section 4.1 of the Employment
Agreement;

WHEREAS, any
capitalized terms that are not defined herein shall have the
meaning set forth in the Employment Agreement.

NOW, THEREFORE, in
consideration of the mutual promises and covenants contained
herein, the Company and the Gregorian agree as follows:

1. Effective
Date: This Agreement shall become effective on the
eighth day after Gregorian delivers to the Company a fully-executed
version of this Agreement without modification or revocation (the
“Effective Date”).

2. Separation from
Employment and Resignation from Board of Directors:
The parties agree that Gregorian’s employment with the
Company terminated, effective February 22, 2007 (the
“Separation Date”). As of the Separation Date, by
executing this Agreement, Gregorian agrees that he no longer holds
the title of, or performs services as, the Company’s Chief
Executive Officer, President or in any other position of employment
with the Company. By executing this Agreement, Gregorian hereby
confirms his resignation effective as of the Separation Date from
his position as a member of the Company’s Board of Directors
(the “Board”) and, to the extent applicable, as a
member of the Board of Directors or as an officer of the
Company’s subsidiaries.

3. Severance
Benefits: Provided that Gregorian complies with the
terms and conditions of this Agreement and his Proprietary Rights
and Nondisclosure Agreement dated April 10, 1995 (the
“Proprietary Rights Agreement” ) attached hereto as
Exhibit A , Gregorian shall be entitled to receive the
following severance benefits (collectively, the “Severance
Benefits”):

a. Severance Pay . The
Company shall pay Gregorian severance pay in the amount of
$910,000, less standard withholdings and authorized deductions (the
“Severance

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Pay”). In accordance with
Section 4.7 of the Employment Agreement, the Severance Pay
will be paid to Gregorian on the first business day following the
six month anniversary of the Separation Date.

b. Health and Welfare
Benefits : Gregorian shall have the option to convert and
continue health and dental insurance for himself and his eligible
dependents after the Separation Date, as may be required or
authorized by law under the Consolidated Omnibus Budget
Reconciliation Act of 1985 (“COBRA”). In the event
Gregorian timely exercises his right to convert his health and
dental insurance for himself and his eligible dependents, Gregorian
will be responsible for paying the COBRA premiums and the Company
shall reimburse Gregorian for the COBRA premiums for the period
commencing on the Effective Date and ending on the earlier of:
(i) the twenty-four (24) month anniversary of the
Separation Date, or (ii) the maximum period of time the
Company is required to provide Gregorian and his eligible
dependants health continuation coverage under COBRA. Reimbursement
shall be made as follows: (x) with respect to COBRA premiums
paid by Gregorian and submitted to the Company for reimbursement
during the first six months following the Separation Date, the
Company shall reimburse Gregorian for all such premiums on the
first business day following the six month anniversary of the
Separation Date; and (y) following the six month anniversary
of the Separation Date, the Company shall reimburse Gregorian for
all COBRA premiums paid by Gregorian within fifteen (15) days
of Gregorian submitting his invoice for paid COBRA premiums to the
Company.

c. Stock Option Extended
Exercise Period . As more fully described in Section 13
below, the exercise period of vested Options shall be extended
until and expire on December 31,2007.

d. Mitigation :
Gregorian will not be required to mitigate damages or the amount of
any payment provided under this Agreement by seeking other
employment or otherwise, nor will the amount of any payment
provided for under this Agreement be reduced by any compensation
earned by Gregorian as a result of employment by another employer
or otherwise.

4. Termination Of
Contractual Relationship: Except as arising out of
this Agreement, the Proprietary Rights Agreement, [the Indemnity
Agreement, dated September 30, 2002, (the “Indemnity
Agreement”), the Restricted Stock Purchase Right Agreement,
dated March 25, 2005 (the “RSPR Agreement”), and
the Stock Option Agreements (the “Stock Option
Agreements”) for the stock option grants, dated
March 28,
2005, October 7,2004, September 10,
2003, April 15, 2003, February 20,
2003, September 5, 2002, May 18,
2002, January 17, 2002, April 24, 2001 and
April 26, 2000 (collectively, the “Stock Option
Grants”), the parties have no further contractual
relationship and Gregorian will have no right to reinstatement with
the Company or any subsidiary.

5. Transition
Services: In accordance with Section 4.4 of
the Employment Agreement, the parties agree that, for a period
commencing on the day after the Separation Date and ending three
months thereafter (the “Consulting Term”), Gregorian
agrees that he will perform consulting services as reasonably
requested from time to time by the Company’s Board

2

of Directors or an executive officer of
the Company to help transition his job duties and responsibilities
to his successor. Nothing in this Agreement will in any way be
construed to constitute Gregorian as an agent, employee or
representative of the Company during the Consulting Term, and
Gregorian will perform all services hereunder during the Consulting
Term as an independent contractor. Gregorian acknowledges and
agrees that Gregorian is obligated to report as income all
compensation received by Gregorian pursuant to this Agreement
during the Consulting Term, and Gregorian agrees (and acknowledges
the obligation) to pay all self-employment and other taxes thereon.
During the Consulting Term, the Company will pay Gregorian $1,000
per month for his services. In addition, all of Gregorian’s
outstanding options, awards of restricted stock and other equity
awards will continue to vest (to the extent not already vested and
to the extent they would otherwise vest pursuant to the agreements
relating to such awards) and in all other respects will remain
subject to the terms and conditions of the agreements relating to
such awards. During the Consulting Term, Gregorian acknowledges
that Gregorian will no longer be entitled to participate in the
employee benefit plans currently and hereafter maintained by the
Company and will not receive any additional benefits from the
Company, except for the payments and benefits provided for in
Sections 3, 5 and 13 of this Agreement.

6. No Other
Compensation or Benefits : Except as expressly set forth
herein in Sections 3, 5 and 13 of this Agreement, Gregorian
acknowledges that he will not receive, and is not entitled to
receive, any additional compensation, severance or benefits after
the Separation Date. On the Separation Date or within 24 hours
thereof, the Company shall pay Gregorian in full for all of his
accrued wages and paid-time off that he earned through the
Separation Date. Gregorian agrees to submit any business expenses
that he incurred in the scope of his employment within fifteen
(15) days following the Separation Date. The Company will
reimburse Gregorian for all outstanding business expenses in
accordance with the Company’s expense reimbursement
policy.

7. No Admission of
Liability Or Wrongdoing : This Agreement does not
constitute an admission by the Company or Gregorian of any
violation of federal, state or local law, ordinance or regulation
or of any violation of the Company’s policies or procedures
or of any liability or wrongdoing whatsoever. Neither this
Agreement nor anything in this Agreement shall be construed to be
or shall be admissible in any proceeding as evidence of liability
or wrongdoing by the Company or Gregorian. This Agreement may be
introduced, however, in any proceeding to enforce the
Agreement.

8. Releases
:

a. Release by
Gregorian . Except for those obligations of the Company created
by or arising out of this Agreement, the Indemnity Agreement, the
RSPR Agreement, the Proprietary Rights Agreement, and the Stock
Option Agreements, Gregorian, on his own behalf and on behalf of
his descendants, dependents, heirs, executors, administrators,
assigns and successors, and each of them, hereby covenants not to
sue and fully releases and discharges the Company and each of its
and their subsidiaries, parent, or affiliated partnerships and
corporations, past and present, as well as each of its and their
directors, officers, trustees, shareholders, members, partners,
representatives, attorneys, assignees, successors, agents
and

3

employees, past and present, and each of
them (individually and collectively, “Company
Releasees”), from and with respect to any and all claims,
wages, agreements, obligations, demands and causes of action, known
or unknown, suspected or unsuspected (collectively,
“Claims”), arising out of or in any way connected with
any acts or omissions committed or omitted by Company Releasees
prior to the date of this Agreement, including but not limited to
Gregorian’s employment and termination of employment with the
Company, membership and termination of membership on the Board of
Directors of the Company, or any other relationship with, interest
in or termination of relationship with any Company Releasees,
including without limiting the generality of the foregoing, any
claim for wages, vesting, overtime, salary, severance pay, director
compensation, commissions, bonus or similar benefit, car allowance,
sick leave, pension, retirement, vacation pay, paid time off, life
insurance, health or medical insurance, including coverage under
the Company’s Executive Health Plan, or any other fringe
benefit, or disability, or any Claim pursuant to any federal, state
or local law, statute or cause of action including, but not limited
to: the federal Civil Rights Act of 1964, as amended; the federal
Americans with Disabilities Act of 1990; the federal Age
Discrimination in Employment Act of 1967, as amended (the
“ADEA”); the California Fair Employment and Housing
Act, as amended; the California Family Rights Act; the California
Labor Code; the Sarbanes-Oxley Act; tort law; contract law;
wrongful discharge; discrimination; retaliation; harassment; fraud;
defamation; emotional distress; breach of the implied covenant of
good faith and fair dealing; or breach of the Executive
Officer’s Change of Control Severance and Benefit Plan.
Notwithstanding any provision of this Section 8, you shall not
hereby release any right you may otherwise have to (i) vested
benefits, if any, under the Company’s 401(k) plan, in
accordance with the terms of that Plan, COBRA health care and
dental care continuation coverage, life insurance conversion
rights, unemployment compensation, workers’ compensation or
disability insurance, or to (ii) indemnification by the
Company pursuant to the Company’s certificate of
incorporation, by-laws, and applicable law.

b. Release by the
Company . Except for those obligations created or confirmed by
or arising out of this Agreement, and except as provided below, the
Company hereby covenants not to sue and releases and discharges
Gregorian and his descendants, dependents, heirs, executors,
administrators, assigns and successors, and each of them
(“Gregorian Releasees”) from and with respect to any
and all claims, agreements, obligations, losses, damages, injuries,
demands and causes of action, known or unknown, suspected or
unsuspected, arising out of or in any way connected with
Gregorian’s employment, membership on the board of directors
of the Company, or any other relationship with, interest in or
termination of relationship with any Company Releasees with the
Company, or any other occurrences, actions, omissions or claims
whatsoever, known or unknown, suspected or unsuspected, which the
Company now owns or holds or has at any time heretofore owned or
held as against Gregorian, provided, however, that such release of
Gregorian shall not extend to any claims, known or unknown,
suspected or unsuspected, against Gregorian that arise out of facts
which demonstrate that Gregorian engaged in reckless, fraudulent or
intentional acts or omissions that (i) constitute a breach of
fiduciary duty, (ii) constitute a crime under any federal,
state, or local statute, law, ordinance or regulation, or
(iii) give rise to a right of recovery by the Company under
any applicable policies of insurance and as to which the insurer
has a right to subrogation against Gregorian; and provided further,
that the foregoing release shall not be

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